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Tuesday, April 26, 2016

No Energy Recovery In Sight: Freeport Fires 25% Of Its Oil And Gas Workers

Submitted by Tyler Durden on 04/26/2016 08:50 -0400http://www.zerohedge.com/news/2016-04-26/no-energy-recovery-sight-freeport-fires-25-its-oil-and-gas-workersOne of the more important companies reporting
today was commodity king Freeport McMoRan which in 2016 has seen its
stock plunge then surge on hopes the Chinese bubble reflation will push
commodities higher. So far it has worked, but far more important was
what FCX' own assessment of the future was: was it preparing for a
strong rebound, or instead, was it slashing costs and firing employees
in another confirmation that the recent rally has been, as Bank of
America's "smart money" clients admit for 13 consecutive weeks, nothing
but fumes. It was the latter, because in addition to reporting poor
earnings numbers that were largely in line with expectations, the
company also announced that it would fire 25% of its oil and gas
employees, hardly a ringing endorsement for the future prospects of the
energy space.
From the report:

During first-quarter 2016, FCX conducted a formal process involving
multiple third-party oil and gas industry and financial participants to
evaluate alternatives for the oil and gas business. Further weakening in
oil and gas prices and negative credit and financing market conditions
during first-quarter 2016 had a significant unfavorable impact on the
process. While the process did not identify a buyer for the entire oil
and gas business, a number of parties have interest in select assets,
and FCX continues to engage in discussions with parties interested in
potential asset or joint venture transactions.

In the interim, FCX is taking immediate steps to reduce oil and gas costs further. In April 2016, FCX announced a new management structure and is instituting an approximate 25 percent oil and gas workforce reduction.
The newly structured oil and gas management team is actively engaged in
managing costs and developing plans to preserve and enhance asset
values. FCX expects to record a charge of approximately $40 million in
second-quarter 2016 associated with workforce reductions and other
restructuring costs.

We fully expect these newly designated "waiters and bartenders" to be
touted by the US Labor Secretary as yet another confirmation of Obama's
great economic recovery.